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Mapping the Technological Capabilities and Competitiveness of Kenya-Owned Floriculture Firms

The Kenyan floriculture, together with the horticulture sector, is considered to be a success story of non-traditional exports in African countries. Kenya is the largest exporter of cut roses to the European Union, and accounts for about 8.4% of the global supply of cut flowers. The floriculture sector is the third highest export earner in Kenya, after tea and tourism, and has experienced steady growth over the years both in volume and value. This paper is part of the AfriCap research project, which aims to advance our understanding of how and why locally owned firms build the technological capabilities required to enter, and remain competitive within, new export sectors such as floriculture. As a first step, we must know what kind of capabilities local firms actually have. In the case of Kenya, local firms include firms owned by Black Kenyans, Asian Kenyans, and White Kenyans. This paper measures the technological capabilities of locally owned floricultural Kenyan firms using data collected through a structured survey carried out with a sample of firms. The survey contains questions based on the technological capabilities required for entering and upgrading within the floriculture global value chain, including investment; product; production, harvest and post-harvest processes; logistics, finance and services linkages; input supply chain linkages; and end market capabilities. Firms were also categorized according to their export market trajectories: indirect exporting through other firms, direct export through auction, and direct export through direct sales. The firm survey analysis shows that there is significant variation of technological capabilities across firms depending on their export market trajectories as well as the type of local ownership: Asian-Kenyan, Black-Kenyan, and White-Kenyan. The survey also included competitiveness measures, and a quantitative analysis of competitiveness and capabilities measures shows a generally positive relationship between the different measures of competitiveness and a firm's aggregate technological capabilities.